RBI releases Discussion Paper on ‘Governance in Commercial Banks in India’

Shri Natarajan Chandrasekaran re-nominated as part-time non-official Director on Central Board of Reserve Bank of India
Shri Natarajan Chandrasekaran re-nominated as part-time non-official Director on Central Board of Reserve Bank of India

The Reserve Bank of India today released on its website a Discussion Paper on ‘Governance in Commercial Banks in India’ for public comments.

2. The objective of the discussion paper is to align the current regulatory framework with global best practices while being mindful of the context of domestic financial system. Accordingly, some of the major highlights of the paper are as follows:

i. Empower the Board of Directors to

  1. set the culture and values of the organisation;
  2. recognise and manage conflicts of interest;
  3. set the appetite for risk and manage risks within the appetite;
  4. improve the supervisory oversight of senior management;

ii. Empower the assurance functions through various interventions;

iii. Achieve clear division of responsibilities between the Board and the management; and

iv. Encourage the separation of ownership from management.

3. Improving the quality of governance in financial intermediaries is an important determinant of efficiency in allocation of resources, protection of depositors’ interest and maintaining financial stability. In this endeavour, the paper has been drafted to encourage stakeholder feedback.

4. Suggestions and comments on the discussion paper may be sent by email latest by July 15, 2020.